Owner-Builder vs Building Contract

Granny Flats: Owner-Builder versus a Building Contract

Today we ask if it’s better to construct your new granny flat as an Owner-Builder or is it better to hire a Qualified Builder to do the work. This is often asked by our clients so we thought we’d illuminate the important aspects of this vital decision.

Below, we’ve listed most of the advantages and disadvantages of Owner Building versus hiring a Qualified Builder.

Advantages of being an Owner-Builder

Money. It saves you money because you are the only builder. You can shop around for cheaper prices plus you completely cut out the builder from the process. In our experience the savings are around 20 to 25% if building to turn-key completion.

Decisions. Being an owner-builder allows you to be intimately involved with every decision from start to finish. This includes all decisions on choosing structural materials to internal inclusions such as floor coverings, the type of trimmings and other finer detail. This way you won’t have to haggle with your builder if you want to make a change or add something during the build. You are the decision maker and this can be an attractive aspect of being an owner builder.

Free Training. Being an Owner builder provides you with free education on the building process and how to build to Australian standards. If you plan on building again in the future, any mistakes act as invaluable lessons which you can carry on to future projects.

You’re the Boss! You get to choose every individual tradesperson and supplier. If you have friends who are ‘tradies’, you can also choose these people to work with you. This helps them and you at the same time.

Disadvantages of being an Owner-Builder

Time. You’ll need lots of time to organise your trades, choose materials, organise deliveries and to coordinate the work. When it rains or deliveries get delayed, you’ll need to re-organise the workers. This takes considerable time and effort as many trades overlap each other, especially after lock-up. In our experience acting as owner builder doubles the build time; if not triples it! This is because you have to dedicate every other minute to the build. This means before work, after work (sometimes during work), mornings, afternoons, evenings and weekends. You could take six months off work to build but then you’ve lost income which doesn’t offset the cost of a qualified builder.

Quality Control. Since you are effectively the builder, you’re responsible for ensuring quality work is done. You’ll need to know what to check at critical stages of the development. This will include checking the foundations are prepared properly, the frame is plumbed and braced properly and the suitable waterproofing is installed, for example.

Stress. If you talk to anyone who has acted as owner-builder, they’ll tell you that building for yourself can be quite exhausting. This is because you have to deal with all of the problems inherent to general construction. A good example is when something goes wrong, it rains or a part is missing. One trade may blame another for an issue and you’re left with the problem. A good builder is a technical guru and a people manager. If you can’t cope with stress, being an owner-builder is not for you.

Where’s my Rent! Many people start a granny flat build in order to save money but don’t realise that time is money. It’s worth noting that for investors, any loss in time during the build is also a loss of rental income.

Getting Finance. Most lenders will not provide construction loans if the builder is an Owner-Builder. There are some very good reasons for this such as most people’s lack of experience, a lack of financial control and the risk that a project will be halted due to family or other personal issues.

Home Owner Warranty. A building contract is covered by seven years of insurance by the builder. You can purchase this type of warranty as an owner-builder but you’ll be the one chasing trades should a claim be necessary.

Below, we’ve listed the advantages and disadvantages of using a Qualified Builder:

Advantages of using a Qualified Builder

The Contract. A contract is binding and enforceable. Put simply, a Building Contract obligates the builder to complete your construction to a strict budget, finish and timeline. This can of course be a disadvantage if the builder isn’t reputable, as described below under ‘disadvantages’.

Experience. An experienced, quality builder knows how to build quickly, efficiently and to the budget. He or she sticks to the ‘The Contract’ and is an expert in all aspects of the build. Preferably, your builder is experienced in building granny flats with their specific requirements in mind. You should also check any builders work and speak with his previous clients to get a real sense of how you and your project will be dealt with.

Speed. Building with a reputable company means faster completion and hence you’ll earn rent from your new granny flat a lot quicker than being an Owner-Builder. They say that time is money and this is especially true if you’re waiting to lease your granny flat out to tenants. You can also get a faster valuation for your property so that you can get onto building your second, third and fourth granny flat!

Low Stress. The only responsibility you’ll bear is choosing colours and finishes. All other issues are borne by the builder.

Disadvantages of using a Qualified Builder

Pricing. Using a qualified builder costs more than Owner Building.

The Contract. We have all heard of fly-by-night builders who breach building contracts by either carrying out shonky work or going bust in the middle of a project. This is where it pays to employ a reputable company. We have discussed this in our other articles and we advise you always check out a builder’s previous work and talk to their previous clients.

Dishonest Builders. It pays to employ an honest, trustworthy and reputable builder. A sure sign of a dishonest builder is one who prices a build based on your personal intellect. If you can’t get a clear picture of the pricing from checking out a builder’s website, that builder wants to check you out before pricing your build. We see this as dishonesty. We strongly believe that all people should be treated equally irrespective of their ‘street wisdom’. This all goes back to the point above about contracts. Suffice to say, there are good builders and there are bad builders.

Choice. Some builders don’t offer a full range of choice as it applies to design, materials and finishes.

Conclusion

At Granny Flats Sydney NSW Pty Ltd, we believe in educating our clients so that they can choose what works best for them. Some of our clients have successfully completed their own granny flat builds and we certainly assist them in this process as much as possible. Throughout the years, we have noticed that successful Owner-Builders have either done it (or part of a build) before, they have ample time on their hands and they they have someone to act as a mentor for their project.

The most important consideration is whether the 20% you’ll save by being an Owner Builder is worth the time and effort. Will your efforts be offset by the loss in rental income caused by the delays when acting as owner-builder? Will your own job suffer? If for example, you lose $10,000 in rent because of a 9-month build (instead of a 3 month build by a qualified builder), is a $10,000 saving worth the time, stress and loss of rental income? In a growing property market, you’re delayed revaluation could cost a lot more than this, should you be looking to rinse and repeat.

There are some definite advantages to being an owner-builder but it’s certainly not for everyone. We hope this helps to highlight some of the important facets when deciding between acting as Owner-Builder or going with a Building Contract by a Qualified Builder.

Yes you can remove the fiberglass pool insert and build a granny flat in its place. There will obviously be some associated costs for doing this – excavation, filling the void and stronger structural support but many people do and they have us arrange this for them.

A separate meter is not mandatory but again can be done and we can organise this for you as well.

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Serge and his team offer an unparallelled solution for helping you create your new granny flat. Whether it is for investment purposes or the family is extending, Granny Flat Approvals is here to help you from start to finish.

My experience with granny flat approvals was wonderful due to Zoe. She was quick, professional and has the background experience to cater to my needs. Looking forward to working with you again. Thank you!

Spoke to Firage for a granny flat, everything went so smoothly and i was kept in the loop with everything. So happy with the whole process and i got the best pricing didn't even need to shop around
thank you for the help!

I sent a SMS to the owner 's mobile phone at 10pm Friday night for an urgent assistance to assess if the granny flat can be built for the property tat I am going for an auction on the next day Saturday!!!! Beleive or not he called me at 9am with clear information and explanation !!! I am so impressed with the services via sms and email. Even they don't charge me anything but very very keen to help. Highly recommend for a reliable and professional services. I would use their service in the future to buold my granny flat!!!! Many thanks gor your help at my need!!!

Having zero knowledge of the building industry and being cautious when choosing the right company, I would have never in my wildest thoughts have expected to be blessed with such an informative, knowledgeable, proactive, and most importantly, honest group of individuals. My experience with Granny Flat Approvals and the team including Faraj, Nick and Serge has been the absolute pinnacle of any client / provider relationship I have had in my entire life; the culture Serge breeds in his company is a testament to the outstanding service and quality his team provides. Thank you for making my experience such a positive and memorable one.

Faraj and the team have been excellent in there professional handling and friendless in my endeavors to build a granny flat, from design to needing a quick response to questions about the build and all the approvals I needed, so thanks for your patience and tolerance of my questions and changes needed. I would highly recommend these guys to anyone.

Faraj and team have been helpful all throughout the application process till approval, they handled all correspondence with engineers and assisted us in following up with council, turned a very stressful process to a very straight forward solution. They managed to push a difficult approval over the line and get the desired results we wanted. If your curious about getting a granny flat for your place i'd suggest have a chat with Faraj and team so they can give their honest opinion about your situation.

Just wanted to write and Thank you guys so much for your prompt service. I had an answer within the working day whether I could have a Granny flat in the garden of a house I was thinking of purchasing. Your advice was very much appreciated. I will recommend you to others and I will be using your company in the not to distant future!

Thank you guys at Granny Flat Approval. The guys are very attentive, and always very responsive to your concerns. It has been a great learning experience and hopefully would be able to work once again. Thank you Faraj and Nicholas and the whole team.